This year, a series of market reports and industry developments call out a clear trend: Parametric insurance is entering the mainstream.

Research & Markets’ Parametric Insurance Market Report 2026, for example, estimated the global parametric insurance market was worth $21.09 billion in 2025 and forecast it to reach $23.85 billion in 2026. These figures represent a compound annual growth rate (CAGR) of 13.1%. Other reports vary, but annual growth predictions are still in the double digits, with figures around $63.8 billion expected by 2035.

Alongside this rapid market growth, which is notably faster than the wider insurance market, we’ve also seen evidence that parametric is growing beyond its traditional verticals. While agriculture, livestock and fisheries still represented 48.9% of the market in 2025, property/casualty is forecast to grow fastest through to 2031. This is driven by demand from commercial properties and infrastructure assets, according to recent Data Bridge Market Research.

In line with this, we’re seeing an expanding range of new parametric and specialty solutions coming to market, each designed around a much broader set of specific risks. These include power outages; increasingly common weather events such as wind, hail and floods; and other forms of disruption affecting businesses and households directly — all of which have become much more difficult to predict and thus insure through conventional products alone.

The main drivers for this growth have been well documented, from increasing climate-related losses and persistent protection gaps to growing demand for faster access to capital following a severe event.

Less attention, however, has been paid to the technological changes going on behind the scenes that have made this expansion possible.

Three Advances in Tech That Have Changed the Game

Even as little as five years ago, many of the new parametric products now coming to market would have been nearly impossible to build, let alone scale. So, what’s changed to make parametric insurance more accessible and operationally viable across a wider range of use cases?

We’re all aware that technology on the whole has rapidly advanced over the past few years, but three developments in particular have helped expand what’s possible when it comes to parametric:

Third-party data has become more available, granular and reliable. While traditional insurance relies on a policyholder to report and prove a loss, parametric insurance is focused on objectively verifying that a predefined event has occurred. Only by increasing access to third-party data, such as power-grid, weather and property data, can insurers confidently build triggers that independently verify events. This makes automated verification more practical and reduces some of the friction, uncertainty and potential for disputes involved in conventional claims. Better data also expands the range of risks that can be covered. The more reliably an event can be measured, the more feasible it becomes to build an insurance product around it.

AI has made increasingly large and fragmented datasets usable. Although data is vital, and insurers collectively possess one of the world’s most valuable pools of property-risk data, it’s often fragmented across individual carriers and datasets, which reduces its usability dramatically. This is where AI comes in, with its ability to process much larger volumes of information, identify patterns, and accelerate the research and analysis needed to understand risks and develop products as a solution. Herein lies the opportunity to move beyond looking at individual insured assets in isolation and understand risk at a property, neighborhood or community level. Insurers can focus less on incremental expense reductions and use better data to achieve much larger improvements in loss outcomes by identifying where mitigation will have the greatest impact.

In that sense, AI isn’t just making underwriting more efficient; it’s also helping insurers extract more value from data they already have and identify new ways to understand and mitigate risk.

Automation and digital infrastructure have made parametric products easier to build and operate. Better data and advances in AI are a huge leap, but they are only useful if they can be translated into practical insurance products. This is where improvements in automation and digital infrastructure have really shown their worth.

Technology can now connect external data sources with underwriting models, policy administration and payment systems, allowing more of the process from event verification through to payout to be automated. That reduces the manual intervention required to operate parametric products and makes it more feasible to run them across larger portfolios. It also opens up new distribution models, including digital and embedded insurance, while giving agents better tools to identify and address protection gaps.

The significance of these advances is, ultimately, commercial. Parametric insurance can only become mainstream if products can be priced, distributed and administered economically across a much larger customer base. Better data, AI and automation are making that possible by reducing the amount of manual work and bespoke analysis required to build and operate cover.

As those costs and practical barriers fall, insurers can consider a wider range of specific risks and serve more customers without each policy becoming a specialist exercise.

That said, while these technological changes have significantly expanded what is commercially possible with parametric insurance, expertise, compliance and human oversight remain essential. In fact, agents alongside tech are an essential part of scaling parametric. Because these products can address risks that customers may not realize are insurable, agents can help identify protection gaps and explain where parametric coverage could complement existing policies.

Technology gives agents the data, tools, and automation to do this at a greater scale. And when paired with insurance expertise and human oversight, these advances are helping take parametric beyond highly customized specialist applications and toward a more mainstream role alongside traditional insurance.